Is now a good time to sell your property

When buying property, selecting a home that will see you make great returns on your investment is essential. And in most cases, to benefit from any capital growth (increase in value), you also need to sell your property.

Selling a property that is no longer turning out a profit relies on the right timing. We have compiled five signs that will let you know when it’s time to sell your property.

1. Is it a seasonal thing?

Many people assume that the best time to sell property is in spring, when all is bright and offers a fresh start. This is not necessarily true as there are many factors that contribute to the sale of the house.

These include the location of the house (is it in a tourist spot or the suburbs?), or whether it attracts loud events during a particular time of the year. You can get one up by selling your property during the traditionally quiet times of the year when most sellers are off on holiday.

This will also give your property time to shine in a smaller pool of houses, rather than it getting lost in the noise of the house selling season.

2. When it’s becoming more of a liability than an asset

You could have invested in a property a while back, but when it came to reviewing time you realised that the property is eating its way into your funds. When you initially bought your property, you took into consideration the holding costs, land tax, income tax, as well as your entry and exit costs.

Another factor you need to consider is the opportunity costs.

Let’s say you bought a property at $450,000 and experienced 5% growth p.a. over the next two years. However, you let the opportunity of buying a property that experiences 10% growth p.a. slip through your fingers.

When the time arises do you sell your property or continue to keep it? Holding onto a property that isn’t appreciating in value, just doesn’t make sense as an investment. Especially if the upkeep is also becoming expensive.

3. Sell when the marginal tax rate is low

Property investment is also about being smart in terms of when to cash in with certain law binding practices. When you have decided to sell, do it when the marginal tax rate is low.

The reason for this is that it will help people who are in retirement or maternity leave incur less Capital Gains Tax. Capital Gains Tax is a tax that is levied on the profits you make when you dispose of an asset.

If you have already built a sizeable property portfolio, it is advisable to talk to you accountant regarding if you should start selling one property a year.

4. Pay off your accumulated debt early so you can enjoy your investment

This will depend on the situation that you are in, and might not work for everyone. However, paying off the debt you have accumulated to build a property investment portfolio earlier can see you enjoying the gains on your capital better.

You could be in the transition phase, where the level of your debt stays the same and you are still experiencing capital growth on your investment, but you are looking to sell.

It’s advisable to pay off the debt you’ve acquired while you are still in the transition phase, so by the time you reach the withdrawal phase you will have a cash flow positive portfolio – therefore decreasing your chances of being forced to sell off assets to repay the accumulated debt.

5. Avoid selling your property in a panic

When you are selling your property, you want to strategise smartly, instead of selling in a panic, as the outcome of a hurried sale may leave you with regret.

It is essential that before taking out a home loan to cover your expenses you look at what is required of you financially. Consider things like, you ability to make repayments if the interest rates increase or worse still, you have to take a pay cut or even lose your job.

Run the numbers in terms of how much you expect in terms of growth vs the cost. It is always good to view this in a sober state of mind so that you will know whether it is worth the expense.

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This article via Your Investment Property does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.